Rapid Corporate Buy-Up of Primary Care Practices

Large health insurers and other companies are especially keen on doctors’ groups that care for patients in private Medicare plans. 

Reading Time 4 mins

Healthcare Industry Acquisitions

The shortage of primary care doctors in the US is worsening, despite their critical role in healthcare. These doctors work in a field that is low-paid and often overlooked. They are burdened with heavy workloads, seeing up to 30 patients per day, addressing various medical issues such as diagnosing strep infections and managing chronic conditions like diabetes. 

Multibillion-dollar corporations, particularly large health insurers like CVS Health and Amazon, are acquiring primary care practices. CVS Health spent around $11 billion to purchase Oak Street Health, a rapidly growing chain of primary care centers across 21 states. Amazon also made a bold move by acquiring One Medical, another major doctors' group, for nearly $4 billion. These corporations are attracted to primary care practices because, despite their lowly status, primary care doctors oversee a large patient base, which brings business and profits to expanding hospital systems, health insurers, and pharmacy companies.  

The corporate consumption of medical care keeps growing. Walgreens Boots Alliance, one of the largest U.S. pharmacy operations, spent $5 billion for a majority stake in VillageMD, a primary care group, and teamed with Cigna to buy another medical group for nearly $9 billion. And short of an outright purchase, UnitedHealth is partnering with Walmart to offer care to older patients. 

The privatization of Medicare and the financial opportunities it presents, with the federal government paying private insurers $400 billion annually, is a significant factor driving the acquisition of primary care practices by multibillion-dollar corporations. The consolidation of medical care is rapidly increasing, leaving patients in the hands of a diminishing number of large companies or hospital groups that control various aspects of healthcare. With nearly 70% of all doctors now employed by hospitals or corporations, many physicians feel a loss of autonomy and limited time to spend with patients. This trend raises concerns about the quality of patient care and the doctor-patient relationship. 

The Challenges & Affects 

The continued consolidation of medical care through the acquisition of doctor practices by corporations raises concerns about prioritizing profits over patient welfare and increasing healthcare costs. Companies argue that these arrangements promote value-based care, with flat fees incentivizing preventive measures and reducing unnecessary procedures. However, the personal doctor-patient relationship may be compromised as parent companies dictate service limitations. The acquisitions may also violate state laws against corporate medicine, and critics warn of potential harm to patients through complex systems and limited access to care. While proponents argue that these deals bring needed funds and improvements, skeptics caution against the shift towards profit-driven healthcare.

• Potential prioritization of profits over patient welfare 
• Increased healthcare costs 
• Erosion of the personal doctor-patient relationship 
• Violation of state laws against corporate medicine
• Potential harm to patients due to complex systems and limited access to care 
• Shift towards profit-driven healthcare models 

What could CMS do? 

CMS (Centers for Medicare and Medicaid Services) can take several steps to navigate the key concerns of corporate acquisitions of doctor practices: 

• Enhanced oversight and regulation: CMS strengthens rules to prioritize patient welfare in corporate acquisitions. 
• Antitrust scrutiny: CMS collaborates with FTC to prevent monopolistic practices and protect competition. 
• Preserving doctor-patient relationship: CMS develops guidelines to safeguard quality care and patient autonomy. 
• Promoting value-based care: CMS encourages payment models based on outcomes and patient satisfaction. 
• Collaboration with state authorities: CMS works with states to uphold laws against corporate interference in patient care. 
• Consumer education and transparency: CMS empowers patients with information about corporate-owned practices and their impact on care. 
• Collaboration with stakeholders: CMS engages healthcare professionals, advocacy groups, and patients to gather input and inform policies. 

Resources:  

CVS Health Acquisitions: https://www.cvshealth.com/news/company-news/cvs-health-reports-first-quarter-2023-results.html 

Amazon Acquirers One Medical: https://press.aboutamazon.com/2022/7/amazon-and-one-medical-sign-an-agreement-for-amazon-to-acquire-one-medical 

Covid Impact on Physician Practices: https://www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/Revised-6-8-21_PAI-Physician-Employment-Study-2021-FINAL.pdf?ver=K6dyoekRSC_c59U8QD1V-A%3d%3d 

Walgreens Boots Alliance: https://news.walgreens.com/press-center/walgreens-boots-alliance-makes-52-billion-investment-in-villagemd-to-deliver-value-based-primary-care-to-communities-across-america.htm